Sacramento home prices continue to recover. As of April 2016, median home prices in the area were level with June 2004.

Though a blunt mathematical tool, the median price is broadly reflective of the trajectory of a market (with some significant caveats). The median home sale price in Sacramento County was $295,000 during April 2016, level with the prior month and up 9% from $270,000 a year earlier, according to CoreLogic.

For perspective, home prices peaked in 2005 at $374,000, then were eviscerated, bottoming at $155,000 in 2011, according to the Sacramento Bee. In the (highly unlikely) event home prices continue at their current rate for a sustained period, prices will be back to that Millennium Boom peak around early 2019. However, home sales volume has been slowing to a crawl across the state, signaling an imminent tempering in prices in the coming months.

The City of Sacramento experienced a much quicker year-over-year increase of 13% in April 2016, while the median home sale price here was $256,000.

Most populous regions in Sacramento County experienced price increases, with the exception of Rancho Cordova, which saw a 6% median price drop to $299,500.

Citrus Heights is especially hot, having increased 15% since this same time last year, with a median price of $270,000.

The problem with median prices

While median prices offer a crude glimpse into local housing markets, they say little to nothing about individual neighborhoods or homes.

In fact, home price tiers move at very different rates depending on whether they are increasing or in decline. For instance, high-tier home prices are notoriously sticky. They tend to decline more slowly in a down market and similarly rise more slowly in a rising market. In contrast, low-tier home prices are more volatile, falling faster and rising faster.

Therefore, while the median price has increase 9% in Sacramento from a year earlier, a low-tier home has likely increased at a higher rate, while high-tier home prices are closer to what they were in 2015.

So, when will the area you serve be fully recovered?

The next boom in home prices is expected to arrive across California around 2019, peaking a couple of years later in 2021. first tuesday anticipates this boom for a number of compelling reasons.

First, interest rates are near their bottom in June 2016. With the global economy in turmoil (no doubt spooked by the recent Brexit), the Federal Reserve (the Fed) is unlikely to increase rates until 2017. When interest rates on mortgages do eventually rise in response, fixed rate mortgage (FRM) rates will invariably increase, immediately reducing buyer purchasing power. In other words, as more of a homebuyer’s mortgage payment goes toward interest and less toward principal, homebuyers will be unable to pay the same high prices without a corresponding upward adjustment in income.

At this time, prices will hesitate then fall for a short period of time while buyer incomes catch up to interest rates.

However, the job recovery continues, and Generation Y — the first-time homebuyer generation previously shut out of the housing market due to delayed careers and lower incomes — is anxious to buy. Further, Baby Boomers are fast approaching retirement age. When they do, many will sell their homes and buy replacement homes. All of this real estate activity is expected toward the end of the decade, and will work in concert to push home sales and prices to their next cyclical peak.

In the meantime, don’t expect the same the 9% average price rise seen this year in Sacramento to continue over the short-term. Flippers and speculators, sensing a softening of the exuberant pricing trajectory, may take the next year off. Long-term homeowners have little to worry about, since the dip due to rising interest rates will be shallow and brief. In fact, they may wish to take advantage of today’s low interest rates before they rise and detract from their purchasing power.